Service businesses lead uneven jobs recovery

ByABC News
July 15, 2012, 9:44 PM

— -- Service businesses are leading an uneven jobs recovery that has pushed sectors such as warehouse club retailers back to their pre-recession employment levels while related categories — such as department stores — are still far from recouping their losses, a USA TODAY analysis shows.

The starkest difference: More than 70% of jobs lost in service industries have returned three years after the recession's end, while only 15% of jobs lost in manufacturing, construction and other industries that produce goods have come back. The analysis is based on Labor Department data from January 2008 — when total U.S. employment peaked — through last month.

"You have winners and losers, and the contrasts are sharper because of the severity of the recession," says Mark Zandi, chief economist at Moody's Analytics.

Overall, the government's latest estimates show that the nation has regained about 3.8 million, or 44%, of the 8.8 million jobs lost in the downturn, which officially began in December 2007 and ended in June 2009. Many economists say those jobs won't all be back until 2015 or later.

Long-term economic trends, some predating the recession, explain some of the disparities. The service sector has outpaced the goods-producing category for years. But manufacturing jobs continued to move abroad in the downturn, and the housing crash crushed the construction industry.

Advances in technology, changes in global trade and other business trends also help explain why some other employment categories have done well and others haven't.

Accounting firms, for instance, have regained 87% of the jobs they lost. The industry is benefiting from growth in start-up businesses, as well as new financial rules and U.S. company expansions abroad, says Scott Moore, a senior manager for the American Institute of CPAs.

Legal services, by contrast, have regained just 17% of their lost jobs.

As litigation waned in the recession, many firms had to charge fixed, rather than hourly, fees, slashing revenue, says Hal Sirkin, a senior partner at Boston Consulting Group. Law firms are also relying more heavily on temporary legal professionals to handle investigations, says Charles Volkert, head of Robert Half Legal, a staffing firm.

Within the leisure and hospitality sector, hotels have recovered about half of the jobs lost in the downturn as profitable corporations boosted business travel. Consumers, on the other hand, face tepid employment and wage growth. The amusement, gambling and recreation category has recouped just 12% of jobs lost.

General merchandisers include warehouse-style discounters such as Sam's Club and Costco that have grown as consumers have turned to them to snap up bulk items, says Jack Kleinhenz, chief economist of the National Retail Federation.

Such stores have recouped 92% of their lost positions. Yet department stores have regained just 41% of their lost jobs.

Although retail sales have risen about 4% annually the last two years, many consumers are shopping online.